In a report, Citi analyzed the performance of risky assets during drawdowns and found they were susceptible to higher volatility and weaker returns. Therefore, the near-term outlook does not seem too rosy for Bitcoin and Ethereum.
Cryptocurrency markets are not immune to fears of a U.S. debt default, sell-offs triggered by negative developments and rallies triggered by headlines suggesting progress, according to Citi strategists.
Cryptocurrencies generally do well in issues related to traditional financial institutions, as reflected in the banking turmoil in March, when Bitcoin outperformed, but perhaps the risks of institutions such as US government defaults are not pictured for decentralized digital assets favorable prospects.